Who do you think you are kidding Mrs Merkel? Britain would thrive if we left the EU

Well, if Angela Merkel thought she would convince us by telling us we couldn’t make a go of things outside the EU, then she badly misread the British character.

Shortly before her meeting with David Cameron on Wednesday, the German Chancellor told MEPs: ‘Being alone in a global population of seven billion isn’t good for Britain. You can be happy on an island, but you can’t be happy on your own.’

I suspect a fair number of us, hearing those remarks, will have muttered: ‘We’ll be the judges of what makes us happy, thank you, Frau Merkel. We managed perfectly well before the EU existed — and we’ll decide for ourselves whether to remain part of it.’

Tough talk: Merkel told MEPs: 'Being alone in a global population of seven billion isn't good for Britain.'

The idea that Britain is too small to survive on its own is wrong on several levels. First, it simply isn’t true that you need to be big to prosper. If it were, then China would be wealthier per capita than Hong Kong, Indonesia than Singapore — and the EU, for that matter, than Switzerland.

What matters in the modern world is having a competitive regulatory regime and tax system. In general, small countries do these things well — which is why the places with the highest per capita income tend to be microstates: the Channel Islands, the United Arab Emirates, Liechtenstein and so on.

The EU, alas, is going in the opposite direction, piling on the regulations and constantly seeking to expand its budget (which is what Mr Cameron and Mrs Merkel were meeting to discuss).

Second, we are not, by any definition, a small island.

We are the seventh largest economy in the world, the fourth military power, a member of the G8 and one of five permanent seat-holders on the UN Security Council. We are a leading member of Nato and the Commonwealth, and our language is spoken all over the Earth.

A mercantile nation: No one is arguing that Britain should cut itself off from its European neighbours. We want commerce and friendship with all well-disposed peoples

We’re not even a small island in the literal sense. Most geographers reckon Great Britain to be the ninth-largest island on the planet.

Plenty of islands seem content to live under their own laws. New Zealand has no plans, as far as I’m aware, to merge with Australia — but Kiwis are not dismissed as bigoted ‘Austrosceptics’ who are clinging to the past. Japan is not applying to join China, but it is not ticked off as a ‘small Sinosceptic island’ which can’t get over the loss of its empire.

In any case, no one — no one — is arguing that Britain should cut itself off from its European neighbours. We are a mercantile nation. We want commerce and friendship with all well-disposed peoples.

The argument is over whether we want to be governed from Brussels. And I don’t think ‘governed from Brussels’ is putting it too strongly.

In the same speech, Chancellor Merkel repeated her call for a federal Europe, in which the European Commission would be the Cabinet, the European Parliament would be the legislature, and the national governments would form a kind of regional senate, like the German Bundesrat. Every EU state, she said, should join the euro.

Do we need to be part of a European state in order to sell to, and buy from, our neighbours? Neither Norway nor Switzerland is a member of the EU, but both are, in slightly different forms, full participants in the European single market.

Last year, Norway exported two-and-a-half times as much per head to the EU as we did, and Switzerland four-and-a-half times as much.

Both countries are covered by the four freedoms of the single market — that is, free movement of goods, services, people and capital — but remain outside the EU’s political structures, outside the Common Agricultural and Fisheries Policies and, critically, outside the Common External Tariff, levied on all goods imported into the EU.

In other words, they can negotiate a free-trade deal with, say, China. We cannot, having abandoned our trade policy to Brussels on the day that we joined.

I can’t help noticing that Norway and Switzerland enjoy the highest standards of living in Europe. Four million Norwegians and seven million Swiss are evidently able not just to survive, but massively to outperform the EU as independent states.

Does Mrs Merkel expect us to believe that 62 million Britons are too few?

The central economic fact of this century is the rise of the middle class in what we still think of as the developing world. David Cameron boasted in his party conference speech last month that, over the past two years, our exports to Brazil were up 25 per cent, to China up 40 per cent, and to Russia up 80 per cent.

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He didn’t mention that our exports to the EU over the same period had fallen. As long as we are part of the EU’s Common External Tariff, we can’t fully exploit the opportunities elsewhere.

The euro crisis has brought poverty and stagnation to Europe, but, according to the IMF, the Commonwealth will grow at 7.3 per cent annually for the next five years.

The real isolationist position is thinking that we can thrive as a member of a cramped and declining European customs union when the growth is taking place across the oceans.

I don’t blame Mrs Merkel for having a different view. Few things are as offensive as the suggestion that the EU is some sort of cover for German imperialism.

Far from being domineering, Germans have shown an extraordinary willingness to subordinate themselves to Brussels, for reasons which are, in the context of German history, perfectly honourable.

Tight-knit: The Germans have shown an extraordinary willingness to subordinate themselves to Brussels

For Mrs Merkel’s generation, European integration was the magic wand that took a broken, occupied, partitioned and dishonoured country after the War and made it wealthy, prosperous, trusted and free. It is understandably beyond criticism. As the Chancellor argued when asking her MPs to cough up for the EU’s bailout fund, ‘no one can take for granted another 50 years of peace in Europe’.

For what it’s worth, I profoundly disagree with her analysis. I see the EU not as a cause but as a symptom of a European peace based on the defeat of fascism, the spread of democracy and the Nato alliance. But I don’t for a moment question her right — or her countrymen’s — to make their own choices.

So if the Germans feel that they are better off in a federal system, pooling their finances with more profligate neighbours, we should salute their selflessness. They are our military and commercial partners, and we have a stake in their success.

All we ask in return is an equivalent readiness to let us make our own decisions.

We may no longer be the chief power on Earth, but we are a large, maritime nation, tied by language and law, by habit and history, to every continent.

We want the friendliest possible relations with our European allies; yet we lift our eyes, also, to more distant horizons. And we don’t feel that we’re quite finished yet.

As Dame Judi Dench, quoting Tennyson, puts it in the current Bond film Skyfall: ‘Though much is taken, much abides; And though we are not now that strength which in old days moved Earth and Heaven, that which we are, we are.’